Automated eCommerce Pricing – is prevention better then cure?

It has been two weekends now since the media reported the issues
with pricing on the screwfix.com site.

For the unaware, online shoppers visiting the screwfix.com
website found all items - from expensive power tools to big ticket
items like ride-on mowers which cost thousands of pounds, retailing
at a bargain price of £34.99 for a few hours.

It was an obvious error and one that is by no means unique to
the DIY sector as it can be a common problem in any sector trading
an eCommerce site.

Needless to say in the case of screwfix.com, a number of people
had a field day bagging bargains while they lasted at the vendor's
expense!

Pricing is consistently changed in a lot of sectors as it must
react to constantly moving market conditions.

Managing pricing sounds simple but can be costly if it is done
incorrectly.

Unfortunately, the fact of the matter is that not enough time
nor thought is given into looking at what the effects could be
should something go wrong with this process leaving vendors
vulnerable.

How can this happen?

With the vast catalogue of products that screwfix.com offers to
customers, it is not practical for each price to be individually
managed via the eCommerce platform.

As such, the common approach to deal with this is that pricing
is mastered in an enterprise resource planning (ERP) system, retail
management system (RMS) or product information system (PIM). This
data is synchronised to the eCommerce platform.

While this is good practice, there are typically no safeguards
to stop situations where prices are updated to potentially
commercially destructive values.

These values are either updated to wrong values due to manual
error, perhaps where a large discount is applied in the ERP system
across a large number of categories in error, and have not been
reviewed before the commerce site has been automatically
updated.

It is also possible technical problems can occur meaning bugs in
the systems being synchronised leading to invalid data being sent
or interpreted thereby causing incorrect pricing.

How can this be prevented?

There are a number of different options available to try and
reduce the risk of this happening.

Whilst the ideal way would be for someone to manually check
pricing on a continual basis, this is not practical nor cost
effective - especially when dealing with large catalogues.

However, an approach to consider is to have some automated check
to ensure large price difference changes do not happen without some
form of manual approval.

On a recent eCommerce implementation which Greenlight delivered
for our client, electronics retailer Maplin, we set up rules that
are configured by the trading team which will not allow any price
change to be automatically made above a certain percentage
threshold.

This is set at category level so should a price be changed for
more than 50 per cent of its current price for example, then the
eCommerce system would not allow it and a notification is sent to
the trading team to flag this having occurred.

Should they wish to manually override the price then, they can
tell the system to do so and to approve change where the threshold
is allowed for that particular product.

Whilst quite a simple thing to do and an intrinsic safeguard
that can be the difference between having a good sale and an actual
"giveaway", it is not often done.

Considering a good and robust pricing approach to your commerce
site is very important but also understanding how this can go wrong
and what the impact is, will then help identify the level of
safeguards that should be put in place to stop this happening.

After all, by the time the price has been changed and is noticed
it may be too late!